Are My Club Dues a Deductible Business Expense
A question CPAs often hear from our clients preparing their business taxes is whether they can deduct the club dues they pay to golf courses and other businesses for entertaining and networking with customers. Prior to the Tax Cuts and Jobs Act (TCJA) going into effect in 2018, the answer was yes. Today, it’s no, but there is a small silver lining.
New Rules for Club Dues Deductions
As set forth in the new tax rules, any membership dues you pay to a club for business, recreation, leisure, country club, or other social purposes are not deductible. The only exception is if they're included as compensation on an employee’s W-2 form.
That silver lining we mentioned?
- Provided there is a business purpose, meals at these locations remain 50% deductible.
- You may still take a 100% deduction for dues you pay to professional and civic organizations, such as bar associations and Rotary clubs. Chambers of commerce, boards of trade, and business leagues also qualify.
Even if the “club” purpose is business-related, there are still limits to what expenses you may deduct. So, if you belong to a professional organization that holds a golf outing, the IRS considers that social/entertainment and you may not deduct any of the related costs on your business taxes. On the other hand, 50% of the cost of a meal at an awards dinner is deductible.
As always, a deductible business expense must be “ordinary and necessary” for the operation of your business. In light of these revised tax laws, you may want to reconsider the amount you pay for club dues and entertainment and develop new tax-saving strategies going forward.
If you’d like additional information about the deductibility of club dues or want to learn more about the new tax laws in general, contact KEGA CPAs online today or call us at 772.231.6902 to schedule a consultation.